Staff Writer @ Lucid Living
The National Consumer Commission (NCC) is looking into the penalty fees charged for rejected debit orders, and banks found to have breached the Consumer Protection Act will face fines and could even be compelled to refund customers.
Commissioner Mamodupi Mohlala wants answers on why a bank, as a third party in a transaction between a consumer and a service provider, could charge penalty fees for declined debit orders. This query is in light of the fact that when a debit order is declined, the default is on the service provider and not the bank.
Mohlala pointed out that she will pursue the matter in line with section 48 of the Consumer Protection Act which deals with unfair, unreasonable or unjust pricing. Those found to have been in breach of the legislation would face fines and be compelled to refund clients, Mohlala said.
Speaking on the sidelines of a National Consumer Forum conference last week, Mohlala said the research was an extension of the Competition Commission’s inquiry into banking fees. She added the fees for declined debit orders seemingly fluctuate depending on the time of the month. The research will be completed by the end of December and banks will be allowed to comment before it is released to the public.
NCC said low-income earners were particularly vulnerable and some domestic workers, for example, had paid 10% of their salaries in declined debit order penalty fees.
Reflecting on the complaints that have been put forward to the NCC, since it started operating six months ago, Mohlala said the financial services sector had about 695 complaints, lower than the 1,819 in motor vehicle sector , 1,263 in retail and 1,059 in telecoms.